ReadCloud Drives 73% EBITDA Surge Amid Strong VET-in-Schools Growth
ReadCloud Limited reports a robust first half FY25 with 13% organic revenue growth and a 73% jump in underlying EBITDA, powered by its expanding VET-in-Schools segment and disciplined cost management.
- 13% organic revenue growth in 1H FY25
- 73% increase in underlying EBITDA driven by operating leverage
- 32% revenue growth in VET-in-Schools segment with 94% retention
- Strong cash position of $3.5 million and zero debt
- FY25 growth guidance maintained despite policy headwinds in NSW and Victoria
Robust First Half Performance
ReadCloud Limited (ASX: RCL) has unveiled a compelling set of results for the first half of fiscal year 2025, showcasing a 13% organic revenue increase to $9.2 million and a striking 73% rise in underlying EBITDA to $1.8 million. This performance underscores the company’s successful execution of its growth strategy, particularly its focus on the vocational education and training (VET) sector.
CEO Andrew Skelton highlighted the transformation and operational leverage achieved, noting that the VET-in-Schools segment was a standout contributor with a 32% revenue uplift to $3.8 million. The segment’s strong retention rate of 94% and gross margins exceeding 90% reflect a solid product-market fit and the company’s ability to capture expanding market opportunities.
VET-in-Schools: A Growth Engine
ReadCloud’s VET-in-Schools offering, which delivers 50 qualifications across 62 schools, continues to gain traction. The number of schools onboarded increased from 51 to 62 in the first half, while qualifications delivered rose 14% year-on-year. This growth is underpinned by the company’s strong connection to industry and career pathways, as well as the rising importance of vocational education amid skills shortages.
Alongside VET-in-Schools, ReadCloud’s eBooks platform also showed resilience, with a 2% revenue increase to $4.23 million driven by domestic sales and a 91% retention rate. Management is actively exploring opportunities to accelerate growth through expanded distribution channels and geographic reach.
Financial Discipline and Market Position
ReadCloud’s disciplined cost management unlocked significant operating leverage, contributing to the substantial EBITDA growth. The company generated $1.9 million in operating cash flow during the half and ended March 2025 with a strong balance sheet featuring $3.5 million in cash and no debt, positioning it well for future growth initiatives.
However, recent policy changes in Victoria and New South Wales are expected to negatively impact Southern Solutions Training Services, a key part of ReadCloud’s group, in the second half of FY25. Despite this, the company remains confident in meeting its full-year organic revenue growth target of 15%, supported by favorable market tailwinds such as the migration to online education and ongoing skills shortages.
Looking Ahead
ReadCloud’s outlook remains positive, with the company well-positioned to capitalize on the growing demand for vocational training and digital learning solutions. The strong first half results validate its strategy and operational execution, but investors will be watching closely how the company navigates the policy headwinds and continues to scale its offerings.
Bottom Line?
ReadCloud’s strong first half momentum sets a promising stage, but policy shifts in key states could test its growth trajectory in the months ahead.
Questions in the middle?
- How will ReadCloud mitigate the impact of NSW and Victoria policy changes on Southern Solutions revenue?
- What initiatives is management pursuing to accelerate eBooks platform growth and geographic expansion?
- Can ReadCloud sustain its high retention rates and gross margins amid increasing competition in vocational education?
